Foreign exchange realisation governs service tax refund on export supplies; free samples without proof of recovery fail the claim.

Refund of service tax under Notification No. 41/2007-S.T. required compliance with the condition in clause (h) of para 2 that sale proceeds be realised in foreign exchange under FEMA, 1999. Where export goods were supplied as free samples and no evidence showed recovery of their value through later exports, the condition was not met. The amendment extending the time limit did not alter the result because the claim failed on non-realisation of foreign exchange. The refund claim was therefore held inadmissible against the assessee.

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Issues: Whether refund of service tax claimed under Notification No. 41/2007-S.T. was admissible when the export goods were supplied as free samples and the sale proceeds were not realised in foreign exchange.

Analysis: Clause (h) of para 2 of Notification No. 41/2007-S.T. required realisation of sale proceeds in foreign exchange under the Foreign Exchange Management Act, 1999 as a condition for refund. The goods were exported free of charge as samples, and no evidence was produced to show that the value of the samples was subsequently recovered from later exports. In the absence of such proof, the statutory condition for refund was not satisfied. The amendment extending the time limit was not decisive because the claim failed on the ground of non-realisation of foreign exchange.

Conclusion: The refund claim was not admissible and the issue was decided against the assessee.

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